Sunday, April 29, 2007

I've talked before about the fundamental disconnect between the RIAA and music consumers. Instead of responding to market demands and profiting from providing customers with what they want, the major labels keep trying to push customers back into buying patterns they've long since abandoned.

For many consumers, WiFi capability is the next logical step for MP3 players. The expectation was that a WiFi-enabled MP3 player would have similar capabilities to a cellphone, or a laptop. That is, access through hotspots, the ability to send files back and forth to other WiFi-enabled devices, perhaps the ability to sync wirelessly.

Enter the Microsoft Zune -- a digital music player with wireless capability. But the major labels had something to say about that. The result was a device crippled almost to uselessness by Digital Rights Management (DRM) -- and a system that rigorously protects the property of the major labels while trampling the rights of others.

Is the Zune wireless? Technically, but Zunes can only communicate wirelessly with other Zunes (that's what "Welcome to the social" refers to -- we'll save the discussion about referencing early 2oth century church ice cream socials in a misguided attempt at hipster coolness for another day). A far cry from true WiFi.

And while you can transfer songs from one Zune to another, the process adds DRM to the file. Send a song to a friend and they can listen to the track three times before it automatically disables itself -- and they better listen promptly, because the track self-destructs after three days whether its played or not.

This was about the only way the major labels would let Microsoft have any kind of wireless capability. But the problem is that this DRM is added to everything transferred from one Zune another. DRM-free songs bands post on their website for fans to share gets this DRM added, even though the bands are against DRM. Podcasts issued with creative commons licenses get this DRM added -- in violation of the terms of use of the creative commons license.

Thursday, April 26, 2007

The Copyright Royalty Board, pushed by the SoundExchange, recently ruled to change the royalty rates for Internet radio stations. Instead of netcasters paying a small fee plus a percentage of their income, the Board opted for a much higher fee, changed for each listener for each song. The rate's structured to rise each year, eventually doubling by 2010. And this change is retroactive back to the beginning of 2006.

So who is the SoundExchange that's been a key player in all this? According to their website, "a dynamic nonprofit performance rights organzation embodying hundreds of recording companies and thousands of artists united in receiving fair compensation for the licensing of their music in the new and ever-expanding digital world."

Members include Sony BMG, Warner Music Group, Universal Music Group and EMI. In other words, the same major labels that as the RIAA wage war against consumers to preserve an outmoded business model have now helped enact a rate guaranteed to kill off most Internet streamers. Want to hear the song? Buy your own copy.

NPR spearheaded an appeal that was denied, so the only recourse left is to have our legislators step in. The major labels have already flexed their political muscle, now it's the public's turn. Savenetradio.org has organized an e-mail campaign that's picking up steam. If you're a music-lover, then the time has come to do something. Or something will get done to you.

Monday, April 23, 2007

Last post I offered up an option to the RIAA –- adapt with the times. My example was the publisher Street and Smith, and how they took their creative content (the Shadow) and continually repackaged it for whatever media the public was consuming at the time. That same publisher provides an example of what happens if you stick with the same business model through thick or thin.

Analog Science Fiction/Science Fact magazine holds the distinction of being the oldest scine fiction magazine continually in print. Started in 1930 as Astounding Science Fiction, the magazine was soon sold to Street and Smith during the heyday of the pulps. Circulation soared, with adolescent boys making up the primary readership. The market matured, and so did the magazine. Under the editorship of John W. Campbell, Astounding printed more adult fiction. Classic stories by Isaac Asimov, Robert Heinlein and many others debuted in the pages of Astounding in the 1940’s.

After World War II, most pulp magazines died off, as the readership shifted to paperbacks. Astounding continued to thrive, however, finding a new readership among those in the fields of science and technology. In time, the magazine changed its name to Analog, citing that its stories were analogs of what could be (this was in the early 1960’s – before “analog” became the downside of “digital”).

By the 1970’s circulation began declining. Although Analog always held its own against rival publication, most adolescents were now interested in TV and movie science fiction, and never got around to the fiction magazines. Analog was sold to Ziff-Davis, and continues publication today, with a circulation of about 10,000.

The lesson for the RIAA? If you stay the course, you can still be profitable – just not as much as you were before.

If the RIAA insists on sticking to the concept of selling bits of plastic, then they should look to Analog. The market will shrink, but eventually stabilize. They can expect a modest profit, rather than the massive profit they currently enjoy.

Despite the lawsuits and lobbying, CD sales will continue to shrink. I don’t think CDs will disappear entirely. After all, the Internet didn’t kill newspapers, e-books didn’t kill paper-printed books, and although virtually everyone uses a computer at work, we still don’t have a paperless office.

So those are the lessons from Street and Smith. Adapt with the times, or be prepared to make less money doing the same old thing. And despite the RIAA’s best efforts, “none of the above” is not an option.

Wednesday, April 18, 2007

This is part one of two-part post. As the music industry frantically tries to reverse a paradigm shift -- even if it means stripping the gears -- I'd like to offer up another example of what happens when a business embraces rather than fights the evolution of its market.

The dairy industry's fight against margarine parallels the actions of the RIAA, and I think gives us a good indication of their probable success. Magazine publishers have also faced the challanges of new media. Let's look at what happens when you focus on content instead of product, and lessons the RIAA should learn.

Lesson 1: Repurpose the contentStreet and Smith was the largest magazine publisher in the US from the end of World War I until they wer bought by Conde Nast in 1959. During the 1930's, pulp fiction magazines were a major source of entertainment for the American public. When the new media radio came on the scene, Street and Smith was an eary adapter, creating an anthology mystery series based on stories published in their magazines. The fictional character they created to host the series was the Shadow, who each week entoned, "The weeds of crime bear bitter fruit. The Shadow knows."

Lesson 2: Give your customers what they want
Although the radio series wasn't that successful, the Shadow generated so much response that Street and Smith launched a magazine devoted to his adventures. It was so successful that the magazine started out monthly, then went to bi-weekly, and then weekly for a brief time, threatening the health and sanity of Walter Gibson, the author the 60,000 word novels about the Shadow that appeared in every issue! Eventually it returned to a bi-weekly schedule.

Lesson 3: Sell the content, not the item
Technically, Street and Smith was only concerned about selling bundles of pulp paper -- just as the record industry has concerned itself with the selling of shiny plastic discs -- and the content was only the way to persuade the customer to by yet another bundle of paper. In reality, Street and Smith understood the value of their content, and it created an additional income stream for them. There were Shadow decoder rings, games, cloaks, and many other licensed tie-in products. The Shadow became a valuable property.

Lesson 4: Adopt to change
The character pulp magazine was a booming business by the late 1930's. In addition to the Shaodw, Street and Smith introduced Doc Savage. There was also the Spider, Operator 5, G-8 and his Battle Aces, and many many more. Comic books entered the scene, and began stealing readers from these pulps. Comics had pictures, and it was a more appealling medium for the adolescent reader, the core hero pulp reader.

Rather than lobbying Congress to pass laws against comics, Street and Smith offered their own line of comics featuring their star heros, including the Shadow. Often the comic books featured adaptations of published adventures -- content Street and Smith had already paid for.

Lesson 5: The value of the content can outlast its original purpose
After World War II the market for pulp fiction magazines all but completely dried up. Adults were reading a new kind of book -- paperbacks -- and kids were reading comics. The Shadow magazine, along with the other hero pulps were quietly cancelled in the late 1940's. Street and Smith was always a diverse publisher, and their income now rested on their general interest and non-fiction magazines -- which is where the market is today.

Eventually Street and Smith was sold to Conde Nast, but the value of the Shadow was never forgotten. A series of original story paperbacks were published in the mid-1960's in an attempt to update the character. In the early 1970s Bantam Book republished a number of the original Shadow novels from the magazine. DC Comics did two runs plus a limited series based on the character, once in the 1970's and again the 1980's. A Shadow movie starring Alex Baldwin was released (although not to any great success). And now Nostalgia Ventures is reprinting the original Shadow novels again.

If Street and Smith had stayed wedded to the concept that they sold magazines, and everyone who wanted was interested in the Shadow had to buy their own copy of the magazine, then a vast fortune would have been lost. Part of what makes the Shadow so valuable is that the character has appeared in virtually every form of media to come along, and as a result has become something of a cultural icon.

The final lesson for the RIAA? Stop chasing pennies, so you can catching dollars. Exchange the concept of making every person pay for every copy of every song they hear in every form of media with a system that gives people what they want at a fair price.

Friday, April 06, 2007

It's been a while since I've talked about Sarah Honenberger's book, "White Lies." When last I talked to the author (who was doing some touring for the book), it had just about sold through its first pressing, and a second printing seemed like a distinct possibility.

I finished reading "White Lies" a month ago, and it was a great experience. I pretty much read the last third non-stop, wanting to know what happened next.

Its a different kind of book than I normally read (my wife says that's an improvement). While some of the publicity and the reviews may suggest its a story about the coverups surrounding children damaged by manditory immunization, it's not the primary thrust of the narrative. This isn't the "Pelican Brief."

The book concerns itself with the mother of one such victim, and how her story impacts the life of her lawyer. "White Lies" traces the development of these two women, their relationship and how they change as the case moves its way through court.

Honenberger is an effective storyteller, writing with transparent prose. This keeps things moving along. The narrative efficiently says what it needs to, packing a great deal of information into very brief chapters.

The author draws on her experience as a practicing attorney to make the courtroom scenes realistic and believable. She also effectively explains in layman's terms the problems and legal concepts behind the lawsuit that drives the story.

If I have one complaint, it's that I felt the story ended about a chapter too soon. There's a compelling subplot involving the lawyer's son that gets resolved offstage in the epilogue. I really wanted to know more firsthand details about how he and his family resolved his conflict.

If you're looking for a story that rips the lid off the immunization coverup, then you need to keep looking. But if you want an examination of the personal cost of this, and how it impacts the lives of a family and community, then I highly recommend "White Lies."

Tuesday, April 03, 2007

Now that some time's passed, its easier to judge the full impact of the "Bum Rush The Charts" initiative. I've already reported on the results. Black Lab did show up on charts throughout the world, but it was fleeting. Check iTunes today and you won't find them at all.

I was hoping they might show up on the BBC Radio 1 download chart, but they didn't quite have the sales. All in all, though, I thought it an interesting and effective experiment. Perhaps if the goal had been to rush the charts for a week rather than a day, the impact would have been greater.

The big news this week is that EMI will be selling songs without DRM (digital rights management). Why does that matter? According to the RIAA, DRM is necessary to prevent people from stealing music. In reality, it has done little to deter theft. DRM has actually made digital music less user-friendly for the honest customer, and in some cases (think Sony root kit) caused actual harm.

In the industry, EMI is disparagingly known as "Every Mistake Imaginable" for their many missteps throughout the years. Perhaps being the least successful of the major labels gave them the courage to make the move to non-DRM sales -- after all, they had the least to lose.

Taking the two stories together, we have a market that's beginning to flex its muscle, and a major label that's making the first step to realistically respond to that market. Pay close attention to what happens over the next few months. This is one paradigm that's poised to shift!

Monday, April 02, 2007

1.4 million Americans who have a computer in their homes refuse to get Internet access because they are not interested in anything on the Internet.

I’m the only person in my house willing to watch a silent movie.

Park Associates released a study of Internet usage. As with any study, parts have been pulled out of context and used for eye-catching headlines in the national news media – I encourage you to read Park’s press release for yourself and see the actual figures and their interpretation of them for yourself.

Over a million Americans who own a computer own a computer are not interested in anything on the Internet. To me, that’s the epitome of being uncurious. There’s nothing of interest on the net? Nothing at all? Considering the scope and breadth of the web, that seems unlikely – but realizing the full value of this resource is very difficult to explain. It really has to be experienced to begin to make sense.

As exciting and wonderful as the web appears on this side of the digital divide, there are those who will not cross over even though they can. They’re not just uncurious – they like it that way.

Which leads me to point two. I’m the only person in my household who enjoys silent films. In fact, a sure way to clear the room is to put one in the player.

Why the strong reaction? Acting in silent films relies on stylized body language to communicate emotion. Makeup is different as well, designed to make the face more expressive and readable rather than realistic. To watch a silent film, you have to shift your expectations a bit (but not lower them). It’s a little different than watching a modern film, but not tremendously so.

But that difference is the deal-breaker at our house. It requires the viewer to stretch in an unusual direction, and that’s where my family draws the line. I think the same may be true for those 1.4 million Americans. The net can be wild and wonderful, but it’s also big and messy and pulls you into new ways of reading and processing information. Whether its cinema or cyberspace, people are only willing to travel but so far outside their comfort zone.

And more’s the pity, because that’s where the really interesting things are happening.